$1 million tab for benefits in Hempfield 'unacceptable'
By Richard Gazarik
Published: Wednesday, May 1, 2013, 12:01 a.m.
Hempfield Area School District residents will be paying $1 million a year in health care costs unless the district can negotiate better deals with its insurance carrier, said Business Manager Jude Abraham.
“We can't keep going at a million dollars a year,” he said. “We've got to negotiate harder. I still say this is unacceptable.”
The school board this week met with representatives of Gateway Financial in Pittsburgh to discuss health care costs, which the provider expects to continue to rise.
Gateway was able to negotiate a cap of 9 percent on premiums for the next 18 months, but that will rise to 11.57 percent because of additional costs when the Affordable Care Act goes into effect. The act will increase the district's costs by nearly $233,000, according to Abraham.
“These fees will be applicable regardless of the insurance carrier,” said William Gallagher, a consultant for Gateway. “These are fees that are going to be passed on by the carrier to the insured for health care.”
Gallagher said many details in the Affordable Care Act, which became law in 2010, are just coming to light.
Gallagher said premium costs are determined by how Hempfield employees use their coverage. Insurers look at these trends in determining costs, he said.
Consultant Susan Klixbull said Hempfield employees had $7 million in claims under the contract that were used to calculate premiums. More payments are being made for dependents rather than the employees themselves, she added.
Because Hempfield employees have a “very rich plan,” the health care cost per employee was $10,589 last year.
Abraham recommended the district consider rejoining the Allegheny County School Health Insurance Consortium, a group of school districts, to lessen its exposure to rate hikes.
He said Hempfield would be part of a larger network that has more than $57 million in reserves and is not subject to trend calculations as it is under Highmark.
Director Randy Stoner was skeptical that the district's consultants have any bargaining power with the insurer.
“Do you really have any leverage against Highmark?” he asked.
“The answer is yes,” said Klixbull.
“The answer is, ‘We'll see,'” Stoner replied.
Richard Gazarik is a staff writer for Trib Total Media. He can be reached at 724-830-6292 or at firstname.lastname@example.org.
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